Basic-cable net has thrived despite absence of ads
“There are no old movies — there are only movies you haven’t seen before.”
That aphorism, coined by film historian/director Peter Bogdanovich, is a favorite of Tom Karsch, exec VP and G.M. of Turner Classic Movies. The quote is one way to explain the success of a niche movie network that, in just 10 years of operation, now flickers in the cable and satellite homes of almost 75 million customers.
TCM’s Turner Entertainment Networks parent thinks so much of it that it has just deposited TCM into the welcoming arms of Steve Koonin, promoted to president last week after successfully refurbishing Turner’s TNT and TBS.
TCM has thrived despite being one of the few basic-cable networks that turns its back on advertising — unlike rivals like AMC, which started taking advertising in 2003 — in effect forgoing upward of $100 million a year in revenues from Madison Avenue.
But cable operators and satcasters more than make up the difference by forking over projected license fees of $199 million in 2006 and $210 million in 2007, according to Kagan Research. TCM spends less than 40% of those fees on programming.
With Madison Avenue off-limits, TCM can embrace older audiences without having to worry about getting punished by the advertisers who snub senior citizens.
These older viewers are a positive lure to Jerry McKenna, head of programming and marketing for top-10 cable operator Cable One, who says, “We carry TCM on 95% of our systems.” McKenna is gung-ho for TCM at least in part because Cable One has a number of retirement communities in its electronic footprint spread across 19 states.
It’s logical that old folks dote on TCM, but all the speculation about who watches the network is just that: speculation. TCM is one of the few cable networks that saves millions of dollars a year by not subscribing to Nielsen.
“That’s really a detriment,” McKenna says. “Ratings help me to position a network.”
For example, a film tier might not be the most rational place for TCM because contempo-movie channels tend to skew young, and the typical 18- to 49-year-old recoils in horror from black-and-white movies.
But Karsch isn’t giving up on younger viewers. TCM has commissioned Richard Schickel to make a 90-minute film on Steven Spielberg, interspersing interviews with clips from the director’s movies.
TCM also has created a homevideo line, a robust Web site and 10 hours of video-on-demand movies a month that will balloon to 35 hours on Time Warner Cable before the year is out.
One of Karsch’s goals is to get some of today’s best-known actors to discuss on film some of the great stars of the past.
“If we could capture Johnny Depp conveying his admiration for Charlie Chaplin, lots of young people would want to check out Chaplin’s movies,” Karsch says.
TCM’s only real competitor in the classic-movie niche is Fox Movie Channel, which doesn’t do the high-profile originals produced by TCM, focuses exclusively on pictures from the library of 20th Century Fox and reaches only about 30 million subs.
AMC used to be a competitor, but it “abdicated the niche” in 2003 when it started to solicit advertising and phased out older movies in favor of pictures from the past two decades, says Laura Behrens cq, cable analyst with Gartner Research.
The purists were appalled, but AMC’s strategy has worked, pumping up its revenues and its appeal to younger viewers.
But one sign that both TCM and FMC should stick to their knitting: a recent Beta Research study, which found that, among potential subscribers, FMC was by far the most sought-after service in the category of “emerging or digital networks,” racking up a 62% score. (Hallmark Movie Channel and Discovery’s Science Channel were a distant second, tied at 46%.)
Oldies may not be golden any more, but they’re still a pretty good business.